The new venture is backed by “several million
dollars” in investments from boldfaced names in the restaurant and technology worlds,
putting the company's valuation at "greater than $20 million,"
Kokonas said.

Investors include Thomas Keller, the world-renowned chef/owner of
Napa Valley's French Laundry and New York's Per Se, both of which will migrate
to the system next year; Chicago's Melman family, owners of restaurant
conglomerate Lettuce Entertain You Enterprises; Dick Costolo, CEO of Twitter;
Kimbal Musk, owner of the Kitchen and a board member of his brother Elon
Musk's Tesla Motors; and Howard Tullman, the
Chicago entrepreneur and venture capitalist behind tech hub 1871.

Kokonas, a former options trader, and Achatz,
who's earned three Michelin stars at Alinea, began using the proprietary
software in 2011 at Next and eventually rolled out the ticketing system to
their other restaurants. The wild success of the novel approach, which requires
diners to purchase seats in advance at the restaurants, has attracted interest
from around the world, eliciting queries from dozens of restaurants seeking to
implement the Web-based technology.

So far, nine other U.S. restaurants have adopted
the software under a pilot program: Elizabeth and Senza in Chicago; Coi and
Lazy Bear in San Francisco; Aldea and WD-50 in New York; Trois Mec in Los
Angeles; Journeyman in Boston; and Tuck Shop in Phoenix. Others are launching
soon, Kokonas said. The pilot program has processed more than $3.1 million in
ticket sales from those restaurants and another $15.1 million from Alinea, Next
and the Aviary.

"I was getting so many requests for the
software that there was no way I could fulfill them," Kokonas said. His
in-house-developed system "wasn't built to scale to hundreds of
restaurants, so we had to try to find a way to build one."

To refine the software for wider adoption and
a more robust user experience, Kokonas and team brought on Brian Fitzpatrick, a software engineer who
launched Google's Chicago engineering team in 2005 as founding partner and
chief technology officer. They also hired JJ Lueck, formerly of Bose, Apple and
Google, as senior engineer; Dan Nelson from Trunk Club as head of user experience; and
Michael Vo, formerly at Blackrock. Steve Bernacki, chief financial officer of
Alinea, Next and the Aviary, will hold the same role at Tock.

Restaurateurs, particularly those in the
fine-dining space, see upside in the ticketing model. Perhaps the biggest is
that it gives restaurants more control over their finances. Revenue can be
projected further in advance. Purchasing is streamlined because a restaurant
knows exactly how many diners it will feed each night, and more important, they
all but eliminate no-shows, the bane of the fine-dining business.

Not many people are willing to stomach
shelling out $806 for a Saturday night reservation for two with beverage
pairings at Next—if they're able to snare a reservation in the first place.
"If people put money down, they tend to show up," Kokonas said.
"And they tend to show up on time."

Scoring a table at Next, the Aviary and other
highly acclaimed restaurants is often more difficult than securing primo seats
for major sporting events, musical acts or theater shows. Kokonas said that
prior to implementing the ticketing system at Alinea, his labor costs
associated with staff answering phones was nearly $200,000 a year. On top of
that, he says, the restaurant lost about half a million dollars over several
years because of no-shows.

'A SMART IDEA'

Under the Tock model, restaurants pay a flat
monthly fee of $695 for access to the platform, which eventually will offer
five ticket types: fully prepaid prix-fixe tickets like those offered by Next
and Alinea; deposit tickets, which require diners to put down a nonrefundable
deposit for a reservation; dynamic deposit tickets, where the deposit varies
depending on the date and time of reservation; special-event tickets; and
no-cost tickets, which function as normal reservations.

Kokonas expects most restaurants will
initially start with the no-cost ticket model and migrate to prepaid over time.

Wylie Dufresne, the avant garde chef behind New York's WD-50,
which is slated to close
tonight after an 11-year-run, used Kokonas' ticketing system to
book the final 10 dinner services at his restaurant. He wasn't sure how diners
would react to having to buy a ticket to a restaurant that once allowed them
simply to call. But within two hours of opening for sale online, the vast
majority of seats were sold, generating some $250,000, Kokonas said. The
remaining tickets were sold within 24 hours.

"It would have taken us days to fill
1,000 seats over the phone, one reservation at a time," Dufresne said.
"This was not only efficient, but the perception was that it would be more
fair and equitable to dinners. There was something about the democratic method
of putting them up first-come, first-served that I liked."

Dufresne, who also owns Alder in New York,
said he is considering rolling out the ticketing method there, perhaps as soon
as early next year.

"I think it's a smart idea, and I think
this is something that's really going to catch on," he said.
"No-shows are a giant source of frustration with restaurant owners and
chefs. One night, we had about 95 covers and we had 30 no-shows. That's a giant
kick in the chest that can affect the bottom line. Notionally, any way of
figuring out how to mitigate the affect of people who don't show up is in my
mind a great idea."

—Peter Frost

Introducing Nick Kokonas's Ticketing System, Tock

Eric DeJesus

Eater

30 November 2014

After months of anticipation and speculation, Nick Kokonas —
the Chicago restaurateur behind Alinea, Next, and the Aviary — has finally
unleashed information about his commercially available ticketing system
platform. Christened Tock (a play on the idea of tickets, time, and the
"tick-tock" sound of a clock), the system will launch in early 2015
with a team of heavy-hitters in Kokonas's corner: Among his investors are
legendary chef Thomas Keller (The French Laundry, Per Se), Twitter CEO Dick Costolo,
venture capitalist Kimbal Musk, chef Ming Tsai, and the Melman family, the
owners of the 118-concept Lettuce Entertain You restaurant group. Keller's
restaurants will join Tock when it launches next year; one of Melman's
properties will be on the pilot-program version in just four weeks. "We
wouldn't have gotten all the people that we've got on there if we weren't doing
something right," Kokonas excitedly tells Eater. "I'm enthusiastic
about our ability to really change the industry."

"I'm enthusiastic about our ability to really change
the industry."

Kokonas has been hinting at the possibilities of Tock —
formerly and colloquially known as "Tickets" — for months. As
promised back in May, Tock will give restaurant owners the option of how many
tables to set aside for pre-purchased tickets or table-holding "deposit
tickets." Tickets, like at a movie or sporting event, simply pay for the
experience in advance, while the deposit tickets apply the full ticket
"fee" to the diner's final bill. For fine-dining restaurants like
Kokonas's Alinea, the pre-purchased ticket guarantees up-front payment for a
multi-course tasting menu. Deposit tickets have worked for neighborhood
restaurants with a la carte menus, like Phoenix's Tuck Shop, which implemented
Kokonas' system in August.

In a now famous blog-post manifesto, Kokonas also revealed
in July that the system would include "dynamic deposit tickets" to
shift demand pricing in "both directions." Tock has delivered: While
the tickets system always allowed restaurants to adjust prices based on the
desirability of reservation time (peak hours could mean higher ticket costs),
dynamic deposit allows restaurants to draw in diners by effectively offering a
discount to book. As a guest, "on days where there are a high number of seats
available, or low-demand days, you could put down a $15 deposit and it would
actually give you a larger credit," Kokonas says.

But today's announcement adds additional options to the mix,
and Tock's $695/month fee for restaurants will offer every feature at the same
flat rate, with no additional fees. "We are trying to build a whole
toolbox of every aspect of what a customer needs, from a booking and table
management and CRM," Kokonas says. Tock will provide a fully integrated
customer service management system, a table management platform, an open API
that allows sharing of data, a social media manager, event ticketing, and
crucially, zero-deposit tickets — which may be better known as traditional
reservations. "One of the reasons to include that is a restaurant may want
all the other features," Kokonas says. "But they're not willing to
take the risk, in their mind, of doing deposit tickets. They'd rather take
ordinary reservations."

The Tock system will offer five types of tickets, including
one that's essentially a regular, no-cost reservation.

And those restaurants might have a point: Early forays into
ticketed dining have proved it doesn't work for everyone. At his Philadelphia
fine-dining restaurant Volver, chef Jose Garces abandoned his restaurant's
ticketing platform just five months in: Its Thundertix system, powered by an
Austin-based company, was often criticized for being too complicated. (Eater
critic Ryan Sutton called the booking process "Sisyphean," a
frustrating journey through "various pitfalls.") One-Michelin-starred
restaurant Elizabeth, an early adopter of Kokonas' system, broke away from the
tickets-only mold and began offering traditional reservations earlier this
summer. A representative from the restaurant, the first outside Kokonas's own
portfolio to offer tickets in Chicago, was diplomatic in her critique, calling
the addition of reservations an effort to "make the experience for our
guests as simple or best as it can be." Even Keller has questioned if the
ticketed platform would work as well for casual restaurants, telling the
Chicago Tribune he's unsure the system is the best option for his
less-in-demand restaurant Bouchon.

But Kokonas cites investor Ming Tsai's Boston restaurant
Blue Dragon as an example of how Tock could work for those customers. According
to Kokonas, Tsai's main dining room is walk-in only, but the chef could use the
Tock platform to sell tickets for Blue Dragon's chef's table. For a farewell
set of dinners, wd~50 chef/owner Wylie Dufresne used Tock's "event
ticket" feature to rack up $41,000 in ticket sales in the first two
minutes; Kokonas says any restaurant on the Tock platform would be able to sell
tickets for special, one-off dinners. "It's just a matter of having every
possible mix for having a ticket, and one of them was an ordinary
reservation," Kokonas says. "Which means it can do everything
OpenTable can do, and then some."

Taking on OpenTable

OpenTable, the 16-year-old reservation service that powers
online reservations for some 32,000 restaurants nationwide, comes up frequently
in conversation with Kokonas. (It's the industry standard-bearer: Per
OpenTable's own numbers, the service seats 15 million diners every month.) But
Tock's ability to draw Keller, one of the country's most high-profile chefs, is
a coup for Kokonas: When Keller's French Laundry joins the Tock line-up next
year, it will switch from its current OpenTable system. The 118 restaurants in
the portfolio of new investor Lettuce Entertain You, according to Kokonas's
numbers, accounted for nearly one percent of all OpenTable's 2013 revenue. (One
of Lettuce's concepts will join the Tock pilot program in the next four weeks,
and Kokonas calls its investment a "huge vote of confidence that this
system can be used in basically any restaurant that takes any type of
reservation.")

"This system can be used in basically any restaurant
that takes any type of reservation."

When chef Daniel Patterson's two-Michelin-starred Coi
announced its switch to the tickets system this summer, it did so by abandoning
OpenTable. At the time, Patterson told Eater Kokonas's ticketed system provided
the best way to curb no-show diners, saying "about 15 percent [of diners]
either cancel or no-show within the last 48 hours." As Kokonas has mentioned
several times of Alinea and Next's ticketing system — which is now referred to
as the "legacy software" in Tock's pilot program — one of its
greatest advantages is that it creates a relationship between the restaurant
and diner. More than simply pre-charging for a seat at the table, it's this
relationship, Kokonas argues, that gives diners more reason to follow through
on a reservation. According to Kokonas's internal data made public this summer,
incidence of no-shows at Alinea dropped to less than two percent in 2013 due to
the ticketing system (no-shows numbered less than one percent for its sister
cocktail bar, the Aviary, which uses deposit tickets).

The addition of Keller's fine-dining institutions the French
Laundry and Per Se, meanwhile, is fueled by the chef/owner's desire to
"improv[e] the relationship with his customers," Kokonas says. Tock
provides restaurant owners with the contact information of everyone who buys a
ticket, allowing restaurateurs to phone guests without the back-and-forth of
leaving reservation request voicemails. From the diner's perspective, Tock
offers optional features like the capability to create a "diner's
profile" (which can deliver information about food allergies and dietary
restricts directly to the restaurant) and the ability to login via social media
accounts, like Facebook and Twitter. "We're not trying to get between a
customer and the restaurant and vice versa," Kokonas says. "We're
simply trying to give a restaurant a toolbox to do all this stuff themselves."

Diners can also log in to Tock and interact with its web
platform without having to download a specific Tock app, and a single
username/login will work across all Tock restaurants (this is not the case in
the current system, on either the restaurant's or the diner's end). Kokonas,
who admits Tock's pilot program interface was "clunky" at times, has
brought in a tech team to improve user experience. Last week, Kokonas
announcedformer Google engineer Brian Fitzpatrick would join as founding
partner and CTO; he'll be joined by a three-person engineering/design team, who
flaunt Apple, Bose, and Trunk Club on their resumes.

"It's going to be one of those things where: Imagine
you had to call an airline right now to book an airplane ticket, or go to a
travel agent," Kokonas says. "It would seem weird. OpenTable's like a
travel agency. I don't need a third-party agent to do that transaction for me
anymore. And that's important. It'll feel weird in five years to not just be on
your phone and instantly make a purchase at a restaurant."

Looking Ahead

Tock, which will be completely redesigned from the current
tickets legacy system, won't roll out until the "late first quarter"
of 2015 — it lives online as tocktix.com. But
Kokonas clearly has big plans for the idea, which according to his numbers, has
processed $3.1 million in ticket sales for its commercial clients thus far this
year (that number doesn't include his own spots in Chicago). "Doing
ticketing, along with an administrative charge, or a service charge, or
whatever you need to call it in your state, is the future of all dining,"
Kokonas says.

Selling tickets and eliminating tipping is the "future
of all dining," Kokonas says.

According to Kokonas, ticketed dining cuts down on food
waste, allows chefs to purchase product more strategically and efficiently, and
thus passes along those savings to the consumer. It also takes a stance on the
much-discussed, often-maligned practice of tipping in restaurants:
Service/administrative charges are often automatically added to the ticket
purchase price. "I think everybody is going to get rid of tips,"
Kokonas says. "At the end of the day, if someone raised our minimum wage
to $15, and our labor costs went up whatever the percentage was, we could
easily change all of our pricing to reflect that without redoing our menus,
without redoing anything. We can change our deposit tickets, we can reduce
no-shows, we can reduce waste. That's what we're doing here."

Kokonas's greatest challenge might be luring customers that
would otherwise balk at paying up-front for a reservation, or conversely,
distance Tock from the recent influx of booking apps, some of which offer
last-minute, "pay-for-play" access to restaurants. He has help. Other
Tock investors from the tech world include Marc Benioff and Scott Hansma of CRM
company Salesforce, LA venture capital firm Upfront Ventures, and "several
others that wish to remain anonymous," Kokonas says. He won't specify the
exact valuation amount, other than that it's in the "tens of
millions" of dollars. (Kokonas tells Crain's Business Chicago the
valuation is worth "greater than $20 million.") And the Tock system
promises a few additional "surprises" that he can't — or won't — go
into further detail about right now. Says Kokonas: "For me, I want the
leaders in the industry to go, 'Here's what's wrong with the industry now, and
here's what we hope it can do.'"

Today, Nick Kokonas (of Chicago’s Alinea, Next and The
Aviary) announced that his restaurant ticketing company has taken several big
steps forward as a challenger to the status quo of online reservations.

First of all, it now has a name: Tock.

The fledgling company has raised “several million dollars on
a tens of millions valuation,” according to Kokonas. Investors include Dick
Costolo of Twitter, Kimbal Musk, Jason Fried, Marc Benioff, Scott Hansma, Ming
Tsai and Melman Family of Lettuce Entertain You. (Rich Melman was an original
OpenTable investor.)

Perhaps just as importantly for momentum within the
restaurant industry, Thomas Keller is aboard as an investor, board member and
advisor. In what is already shaping up to be a big year of changes at the
French Laundry, Keller will be incorporating Tock at both the French Laundry
and Per Se this spring.

“It’s a reservations system,” says Keller, who politely
bristles at the “tickets” label, instead explaining that it will be a new
feature that will improve the guest experience at the French Laundry.

“Right now when you call for a reservation at 10 a.m., 90
percent of the time you’ll get a busy signal,” says Keller. “Then the majority
of our guests who get through get the response of ‘Sorry we’re booked.’ Now
they are disappointed they didn’t get a reservations. This affords certainly
more transparency and more opportunity to get a reservation without the
frustration of calling and getting a busy signal. We’re increasing the quality
of experience for our guests.”

He likens it to the initial shift to online reservations a
decade ago. Furthermore, the three French Laundry reservationists who might
spend 80 percent of the day saying no to would-be diners will be able to spend
their time acting more like a true concierge service for French Laundry guests,
he adds. There will be no dynamic pricing at the French Laundry.

Kokonas says that initially, it wasn’t an easy sell to
Keller.

“Chef Keller, it is fair to say, was an early skeptic on the
system — going back two years or so,” explains Kokonas via email. “We’ve had
many conversations over a long period of time and his main comment to me was
always to push us: ‘how can we make it better for our customers.’”

One of Kokonas’ solutions was to build out a virtual “toolbox”
for all restaurants, so that each business can customize it to its needs: “Not
all features will apply to every restaurant, but they can pick and use the
features they need. So some may want a wait list while others will not.”

For the French Laundry, Tock added custom features like the
ability to exchange tickets a certain number of days out, and a wait-list for
last-minute bookings rather than announcing sudden availability via social
media, as Kokonas and chef-partner Grant Achatz do at Alinea and Next.

The interior of Atelier Crenn in San Francisco is seen on
November 11, 2014. John Storey

Atelier Crenn in San Francisco. Photo: John Storey

For the definitive exegesis of his ticketing system,
Kokonas’ June very thorough blog post explains nearly everything surrounding
his little experiment, from finance to philosophy.

Down the line, Kokonas imagines that Tock can be a tool for
any business that conducts a time-slotted charge, from hair salons and spas to
private training and non-emergency medicine.

Outside of the Alinea family tree in Chicago, nine
restaurants across the country are currently using Tock’s “legacy” software,
including a pair of Bay Area restaurants in Coi and Lazy Bear. (Note: Coi is
doing both tickets and OpenTable.)

Other Bay Area restaurants are considering Tock, including
Atelier Crenn, Dominique Crenn‘s Michelin-two-star in San Francisco.

“For fine dining like us, it’s the idea of when you go to
football game or the theater, you buy the ticket before. It’s already paid for.
It’s basically the same when you come to our type of restaurant,” says Crenn.
“The thing is we get a lot of cancellations. It’s not like a bistro where you
can get walk-ins.”

“The drawback is that the American mentality – I don’t know
that they’re ready yet,” Crenn says, echoing Keller’s original concerns: How
would a potential change make for a better customer experience? Crenn explains
that if they did it, they would have to educate customers and give them all the
right information.

As we’ve reported in the past, OpenTable is an expensive
online reservations system for restaurants, with monthly fees, set-up fees and
individual cover fees. Though the monthly fee is $199, a big and busy
restaurant like Yountville’s Bottega can pay around $100,000 a year.
OpenTable’s monopoly on the online reservation game has sparked undercutting
competitors like Yelp’s SeatMe, which has a flat rate of $99 per month.

tock-white-on-blueDuring Tock’s pilot program, the monthly
flat fee is $695, with no transaction fees. There is no annual contract,
and payments are processed through Braintree.

When it fully launches, Tock will have five different types
of tickets: Deposit Tickets, Dynamic Deposit Tickets, Event Tickets, Fully
Prepaid Prix Fixe Tickets, and “ordinary reservations” that are essentially a
ticket price equal to zero.

Places like the Aviary and Phoenix’s Tuck Shop use Tock, but
don’t serve tasting menus. Instead, 100 percent of the deposit is applied to
the final bill. Kokonas says that the system has cut down no-shows at the
Aviary from 14 percent to less than two percent. He notes that dynamic deposit
tickets can incentivize customers to come during non-peak times. For example, a
$10 deposit could yield a $15 credit.

With a rising minimum wage and other rising costs, Bay Area
restaurateurs find themselves in a challenging financial time. Some are moving
to a tipless restaurant model to help combat the situation, but perhaps tickets
can also help the bottom line. It’s obviously worked elsewhere.

For example, if a party of four no-shows at Atelier Crenn,
that’s probably an instant loss of roughly $2,000, explains Crenn. That money
can go a long way in restaurant operations.

“We’re still thinking about it. Nick has a great product.
It’s a pretty tough decision but there’s a change that needs to be made,” says
Crenn. “It’s a system that for us as businesses, it’s really, really good … On
the other hand, what will the people think about it?”